financial results briefing for the year ended march 31 ... · street fighter is played in over 100...
TRANSCRIPT
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Financial Results Briefing for the Year ended March 31, 2018
Summary of Chairman and CEO Kenzo Tsujimoto’s Presentation
(May 9, 2018)
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1-1. Medium-Term Goals Going Forward
・Since the fiscal year ended March 2014 we have achieved five consecutive years of
operating income growth.
・What is more, as a result of optimizing the balance of our work-in-progress in
development, the profit line items from ordinary income down have been steadily
growing.
・Moving forward, we aim to build up a consistent revenue foundation in order to
continue to achieve operating income growth for each of the next five, and even ten,
fiscal years.
・Further, due to the rising ratio of digital sales, in the future we can expect to improve
our profitability even more, as general costs such as those for discs and packaging
decrease.
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1-2. Medium-Term Goals Going Forward
・This is an image of our future growth that I shared with you in May of last year.
・We will pursue growth driven by our core Consumer business. In addition to
strengthening our new titles, we will grow sales of our catalog titles by maximizing
the lifecycle of titles via digital sales.
・For each title, we will attempt to continue sales over a five-year period, utilizing a
variety of pricing strategies and approaching a wide breadth of user segments.
Through endeavors such as these, we aim to achieve 25 million units in sales globally
for the current fiscal year.
・An example to illustrate my points: cumulatively, including all associated versions of the
game, Resident Evil 5 has sold more than 10 million units. In the global market, with
an install base of 100 million consoles, the amount of customers you acquire is critical,
which is why we must set our sights to the world.
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1-3. Medium-Term Goals Going Forward
・If you lay out our results for the previous five years, you can see that we’ve built up
our profit in the Consumer business, and are on our way to developing a structure of
consistent growth.
・In recent years, the Consumer business has accounted for a larger ratio of profit,
however, in the past the Pachinko & Pachislo has offset downturns in our Consumer
business; we have developed a revenue structure that is holistic, which does not rely
on any single business.
・Moving forward, we will continue to pursue profit growth through contributions from
our major Consumer IP, such as Monster Hunter and Resident Evil.
・We’ve also seen rising interest in esports at the global level in recent years,
highlighting the idea that games are not only fun to play but also fun to watch.
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・Tournaments are help throughout the world, and likewise, spectators tune in to watch
from all corners of the globe. In order to garner a base of support in this market, the
content or IP must be something that is familiar to people everywhere. Case in point,
Street Fighter is played in over 100 countries across the world, with participants
gathering for tournaments from more than 20 different countries.
・Capcom is committed to strengthening its esports endeavors both in Japan and
overseas. In order to spread esports however, it is important to not only focus on
promoting events aimed at pro-gamers or top-tier competitors, but also to build out a
foundation for competition by promoting events aimed at amateur players.
・We’re aiming for future monetization by focusing our efforts on growing the size of the
market over the next five years.
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2-1. World-Class Brands: Street Fighter Games
・My vision of a “global brand” is one that has top share in the North American and
European markets.
・When situated in Japan, it’s often the case that you chase after the top spot in Japan
only; however, Japan’s share of the world market is limited. My requirements for
growth are, establishing a customer base in more than 100 countries, and producing
brands that sell worldwide.
・Fortunately, Street Fighter is well known in both North America and Europe; this brand
recognition is a strength that contributes to running events, such as when we hold
esports tournaments.
・When we consider that digital downloads are only going to further gain traction, and
therefore make it possible to approach any market in the world, the importance of the
global branding of our content is certain to increase.
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2-1. World-Class Brands: Street Fighter Hollywood Movie
・One key to global branding can be found in Hollywood adaptations.
・At the time, there were a fair number of skeptics regarding branching out into movies,
however in 1994 we invested the entire ¥4 billion to make this Hollywood film. At that
time, and even today, no other Japanese company has completely financed a film and
produced a return of ¥15.5 billion.
・Promotion for a given game runs through the short window of time prior to and
following the game’s release; with a movie however, even after its theater run has
ended, it continues to have a presence in the long-term on cable television broadcast
or through DVD sales. Even today, we enjoy approximately ¥50 million annually in
revenue from this film adaptation.
・From both a global and a long-term perspective, having been confident in 1) the global
adoption of the content, 2) the long-term revenue and 3) the increase in users, we
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carried out this film adaptation, which has proven successful in translating to not only
revenue but also the expansion of the Capcom brand.
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2-2. World-Class Brands: Movies, Animation and More
・In addition to Street Fighter, we’ve leveraged content from our global brands to
produce numerous works in the visual arts and media.
・These sorts of productions get seen by many people, contributing to strengthening our
brands.
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2-3. World-Class Brands: Resident Evil Games
・Resident Evil has also been adapted into its own run of six Hollywood movies, which
will contribute to further strengthening the brand in the future.
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2-4. World-Class Brands: Monster Hunter Games
・Capcom owns a wealth of various IP, however, in order to solidify Resident Evil, Street
Fighter and Monster Hunter as global brands, we will continue to focus on these
three.
・By growing the scope of digital sales, the new Monster Hunter: World became the
best-selling title in Capcom’s history. However, in considering the total global
installation base of hardware, I feel there is still a lot of room for growth. A
fundamental strategy for us moving forward will therefore be to aim for global sales
expansion over the course of multiple years.
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2-5. A Portfolio of Leading Brands
・In order to create titles for these top brands, Capcom has invested sizable amounts
into development. As such, for a given title that has passed its peak in sales, and for
which it has been judged difficult to achieve the lifetime sales target, we endeavor to
carry out amortization early.
・At the same time, Capcom is further improving its cash flows on the basis of definite
profit generation and accurate recognition of costs.
・Further, in order to ensure dividends as a reward to all of our shareholders, we
continue to pursue the goal of increasing our operating income each fiscal year
moving forward. In conjunction with this, we are committed to growth in the
medium- to long-term, and are making the necessary investments to thrive in the
next generation.
・Regarding our Mobile business, we believe that a change is coming in how mobile
devices are used for entertainment in the future, due to dramatic upcoming
technological innovations as well as advancements in telecommunications standards.
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Capcom maintains a forward orientation looking five years ahead, and is structured
to flexibly adapt to possible developments in all of our markets.
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Investing in Development & Facilities
・Thanks to technological innovations, the way in which we enjoy home video games
has evolved. We developed Monster Hunter: World to support 4K, however should
high-definition games become the norm, beyond games, it could spur on the spread
of esports, with spectators viewing events on their big-screen televisions. For our part
as well, Capcom is committed to dedicating human resources to the expansion of
esports.
・Over the next five years, the home video game market is expected to mature further.
The install base for major consoles will surpass its current 100 million-unit level, and
grow even larger. In the 2017 fiscal year, we made Monster Hunter: World a global
success; however, we are committed to attaining the same success for our other titles
going forward, and ask for your continued support.
・I would like to close my presentation here. The president will now explain the details
of our strategy.